After payment reversals and blocking withdrawals in past for Indian users, PayPal has once again some worrying news for Indian users - citing RBI (Reserve Bank of India) guidelines PayPal has amended it's user agreement for India effectively blocking them from sending money in their PayPal account balance which can only be withdrawn to an Indian bank account now, and has also limited received payments to US$500 per transaction for any export-related goods or services.

To better understand the implications of these new changes here is a FAQ.

Frequently Asked Questions:

Q: Why will PayPal not allow me to receive more than US$500?
Starting 1 March, 2011, PayPal customers in India will not be allowed to receive payments for any export-related goods or services for an amount exceeding US$500 per transaction. This change is to ensure that we continue to comply with the RBI Guidelines.

Q: Why will PayPal not allow me to keep money in my PayPal balance?
Starting 1 March, 2011, PayPal customers in India will not be able to keep money in their PayPal account balance. Instead, all money received into a PayPal account must be transferred to a customer's India bank account within 7 days from the receipt of confirmation from the buyer in respect of the good or services. This change is to ensure that we continue to comply with the RBI Guidelines.

Q: Will my customers be able to complete their checkout with their PayPal account balance?
We're glad that you offer PayPal to your customers. Unfortunately, we will not allow customers in India to send money from their PayPal account balance starting 1 March, 2011. This means that your customers will need to link a credit card to their account in before sending you money with PayPal. This change is to ensure that we continue to comply with the RBI Guidelines.

Q: The customers on my website are not able to complete purchase or pay via PayPal. Why?
Starting 1 March, 2011, PayPal customers in India will not be allowed to receive payments for any export-related goods or services for an amount exceeding US$500 per transaction. If you are listing products greater than US$500 per transaction then you may need to seek alternative methods of payment. This change is to ensure that we continue to comply with the RBI Guidelines.

Q: What is meant by receipt of confirmation from the buyer in respect of goods and services?
As an exporter of products or services abroad, you need to ensure that your buyer has received the product or services as per specifications set out on your website. As an exporter of goods, you may withdraw the balance to your bank account in India upon reasonable consideration of shipping time and other clearances such as excise and customs for the destination country. As an exporter of services, you may withdraw the balance to your bank account in India upon receipt of payment from your buyer into your PayPal account.